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STARS WARS
A Business Analysis Report on the Amaya Online Poker Crisis
December 2014
C O N T E N T S
Introduction 3
Chapter IV
Part One The Flight Has Begun 4
Part Two A Game of Cards 5
Part Three Window of Opportunity 5
Chapter V
Part One The Lost Empire 7
Part Two Knockout Contest 7
Part Three Time is Money 11
Chapter VI
Part One Method in the Madness 13
Part Two Bounty Hunting 14
Part Three Mission Impossible 16
Conclusion 19
Summary 21
Roadmaps 22
Behavioural Segment 25
Bibliography 27
B Y L . V . S L I S Z
Introduction
On the 12th
of June 2014, Amaya Gaming Group agreed to purchase PokerStars, Full Tilt and
parent company Rational Group for $4.9 billion. The deal was completed on the 1st
of August.
On October 30th
, CEO David Beezov announced that there will be an increase in rake at
PokerStars, incorporating such games as heads-up sit-and-go's, medium- & high-stakes sit-
and-go's, and medium & high stakes cash games. These were to take effect on November 3rd
.
In addition to this there will be a 'slight' reduction in the VIP rewards on the 1st
of January.1
This broadcast stood alongside earlier announcements that revealed the initiation of an exchange
rate fee of 2.5% and the implementation of sports betting and casino games, both of which
have already taken effect. The frst was rendered on October 9th
in the form of the Spin & Go,
a notorious 3-man sit-and-go in which the 'spin' prior to the match would determine whether
the players would be competing for 2x the buy-in or up to 1200x the buy-in.
It sparked 7.3 million games within the frst 10 days. However, of the 7.3 million games, only 377
reached the jackpot (1/20,000), the winner from each of these games receiving 1000x the buy-in.2
This jackpot has since been increase to 3,000x, heightening its gambling element and reaching a
maximum of $90,000 for a $30 game. There would also be an increase in rake for this format.
C H A P T E R I V
A N E W H O P E
Part One
As you might expect, these changes provoked great outrage, becoming the centre topic of the
poker world in the days to follow. The PokerStars TwoPlusTwo thread saw a total of 554 posts
within the frst day, all of which were displays of annoyance, disappointment, anger, disgust and
skepticism.3
The reaction of every player - recreational, regular and professional alike – was of
considerable frustration. Players became rebellious, threatening to leave the site and attempting to
organise sit-outs, but to no avail.4
To some these changes would seem foolish, as poker is an exceedingly communal game in which
players have the power to unite. Although Alex Fitzgerald – professional player, coach and
columnist - claims otherwise, that players 'have never shown the ability to unionise'.5
Nevertheless, a number of threads targeting PokerStars have since materialised on TwoPlusTwo -
'Dear Poker Stars, Regs are Getting Completely Crushed in Zoom Games', 'Can PokerStars close
an count of an innocent player and prevent him from achieving SNE?', 'Petition – PokerStars:
Lower the price of PLO Zoom', 'Outrageous Changes at PokerStars “Quiz”' - each of which
have embraced verbal assaults as well as signs of detachment in such replies as 'they don't care'
and 'just move to another site'.6
Many have described these changes as shortsighted, greedy and neglectful, eroding the brand's
image of being very respectful of their customers. Others have theorised that it is simply a
method for hindering the regulars in order to turn PokerStars into a gambling platform.
The company has also parted ways with many of their Team PokerStars Pros such as
Netherlands' all-time money winner Marcel Luske and 2009 WSOP main event winner Joe Cada.
Cada disclosed that he decided to leave the brand after the new occupiers refused to bestow him
with the customary 100% rakeback. Again, this was described as shortsighted.7
To the shock of many players, even the likes of poker personality and two-time EPT winner
Victoria Coren-Michell recently proclaimed her departure from Team PokerStars Pro in response
to their introduction of an online casino. Despite having been a representative for 7 years, she
stated how she “cannot professionally and publicly endorse it . . . Poker is the game I love, poker is
what I signed up to promote.”8
Over the course of the month, players have speculated on internet forums and social networks
that this may just be the impending doom of online poker, where proftable players become
unproftable and low-stakes players struggle to become high-stakes players. Even the Spin & Go
has been described as having 'disrupted the SNG ecosystem', not counting the 9% shift of players
away from the cash games.9
Supernova Elite and TiltBook founder Tomas 'masuronike' Kubaliak
swiftly launched a petition against the Spin & Go, composing two sample letters for participants:
one that suggests having the multiplier lowered to 100x the buy-in in order to alleviate the gamble
factor, and one that supports its complete eradication.10
From all the great controversy that has arisen over the past month, it appears that this has become
defning moment in online poker history.
Part Two
Word has spread that many players have started to leave PokerStars. On November 19th
,
Supernova Tomas 'Scarmaker' Molcan wrote a TiltBook newsletter on how many players 'swore...
and then swore again that they'll switch sites if the opportunity arise, and it seems like that is
exactly what is beginning to happen.' Arguing that while player power is limited, history has
shown that organised player movement can have results.11
iPoker, who produces software for 27 different companies including PaddyPoker, Ladbrokes,
WilliamHill, Bet365 and Titan Poker, have become aware of the opportunity here by constructing
a heads-up hyper-turbo with the same structure as that of PokerStars (released November 18th
).12
These are sites that are celebrated for generally having a higher percentage of recreational players
(more commonly referred to as 'fsh'), and can now offer better loyal programs and lower rakes
than that of PokerStars.
Fitzgerald reinforces this by asserting that 'I, for one, will no longer play a regular schedule there.
The smaller sites have always had weaker competition, and now they will have better rake rates.'
This is supported by low-stakes professional Nathan Williams who revealed that even though he
will not refrain from playing at PokerStars, 'I will continue to spread my play around other sites if
I see better games, rake levels, and rakeback offered.'13
With the volume of information that is continually fowing through digital media, it will not be
long before such developments attract a wave of medium- and high-stakes players. Namely for
proftability, but also as a passive-aggressive attack on PokerStars which outlines the emotional
signifcance of this current scenario and the profound infuence it could have on the decisions
that poker sites make.
This move by iPoker could become a momentous event as it demonstrates that other poker sites
are now willing to contend with the likes of PokerStars. With the lack of competition having
always been a major issue, it now serves as a central aspect for the survival of online poker.
Part Three
What needs to be fully understood is the business opportunity that this moment in time presents.
These events have triggered an almost revolutionary phenomenon and provoked a dramatic
increase in churn for PokerStars, creating a window of opportunity for competing poker sites.
Most of all the likes of PartyPoker which boasts a widely known and long established prominence
within the poker world, signifying vast potential for customer acquisition.
No alteration, development or transformation within PartyPoker will be of greater value than
right now. Perseverance is vital for keeping ahead of the curve as Bwin.Party will also be
competing on a global level with PokerStar's newfound casino games and sports betting.
At the turn of the year PokerStars will become a force within New Jersey. David Beezov affrms
that Amaya's track record in the US and current position in New Jersey will facilitate a 'speedier
entry' of the PokerStars brand into the US.'14
This is all part of Amaya's plans to infltrate the
US market and turn the $4 billion poker market into a $25 billion online gaming monopoly.
And so time is of the essence as PartyPoker is still the prevailing force, having recently made
PokerNews.com with the declaration of New Jersey's biggest weekend winners Jon 'itsmejon'
Borenstien and 'BossSTIk' in the $50,000 guaranteed.15
The online poker world thrives on competition so it is not only benefcial but imperative that
PartyPoker strives to challenge PokerStars. With the rise of rake and introduction of casino
games, PokerStars is - in the words of online pro Ola Amundsgard - 'turning more and more into
a place where only the house wins, which is really bad for the game', concluding with how he
fears that Amaya 'is going to kill online poker. They sure have the power to do it.'16
This is a circumstance that Playtech - the parent company of iPoker - recognise. If Bwin.Party
is sold to Amaya then it will create a monopoly of monster proportion which will irrefutably lead
to the demise of proftable poker.
But it is all very much in the early stages. The PokerStars community feel they have been betrayed
by Amaya who are simply using poker as a platform for online gambling. Based on numbers
alone, it is still a very competitive poker site - but that is all it is now: numbers - the new owners
are showing no regard to the game itself and little concern to its players.
January will be a very interesting month for poker indeed, matters will continue to escalate as
PokerStars implements the second part of its higher rakes and lower rewards scheme. During this
delicate time, the sooner we act, the greater our yield will be.
It is time to launch a counterattack on the Death Stars before its too late...
C H A P T E R V
T H E E M P I R E S T R I K E S B A C K
Part One
Bwin.Party Digital Entertainment, it was recognised as the world's largest traded online gaming
frm, but that was before the arrival of Amaya. It is best known for its sport betting brand Bwin,
and its online poker room PartyPoker.com.
PartyPoker was once the world's largest online poker brand. Launched in 2001, it was a pioneer
of online poker, but that was before the arrival of the 'Unlawful Internet Gambling Enforcement
Act of 2006'. It was because of this that the site was forced to pullout of the US market, instantly
costing the site 3/4 of its player base and relinquishing its reign over the online industry.17
This made way for competing brands PokerStars and Full Tilt - who remained in the US market
– to be become the dominating force. Despite all as such, PartyPoker now thrives as the 3rd
largest
poker room in the online realm.18
It is advertised by a host of professionals on the live circuit, it
operates its highly revered Premier League Poker (now reaching the 7th
series) and further holds a
partnership with the World Poker Tour, endorsed by its host: Mike Sexton.
It is indeed a very recognisable and respected brand in the world of poker.
Part Two
PokerStars now aims to serve the recreational player. Yet our target audience are not the
amateurs, but rather the experienced regulars that PokerStars has forsaken, the passionate
mathematicians who make longterm investments in the name of proft. This is where we will
sow our seeds.
In the same way that PokerStars has made a short term gain in sacrifce of longterm proft,
PartyPoker must be willing to make a short term sacrifce in order to maximise customer lifetime
value. Whatever loss is made in the lowering of rake will be outweighed by customer acquisition
and the reputation that the PartyPoker label establishes for itself - the reputation it once had
before the fall of its US empire.
The frst step to take will certainly be the least risky. It will appeal to the widest dynamic of player
- amateur and professional alike. This is the engineering of regular full ring knockout sit-and-gos.
They will function the same as the original sit-and-gos, except 1/5 of the prize pool will be
dedicated to the elimination of other players...
PokerStars versus PartyPoker
Regular Full Ring Knockouts
$ Previous New $ Current New %
1.50 1.08 + 0.27 +
0.15
1.03 + 0.26 +
0.21
2 1.80 +
0.20
1.44 + 0.36 +
0.20
-28.6
-12 vs $3
3 2.56 + 0.64 +
0.30
2.13 + 0.53 +
0.34
5 4.55 +
0.45
3.65 + 0.90 +
0.45
-20.6
0 vs $7
7 5.50 + 1.30 +
0.50
5.10 + 1.27 +
0.63
10 9.10 +
0.90
7.30 + 1.80 +
0.90
-7.4
+3.8 vs $15
15 11.12 + 2.78 +
1.10
10.96 + 2.74 +
1.30
20 18.20 +
1.80
14.60 + 3.60 +
1.60
-7.7
-7.7 vs $30
30 22.24 + 5.56 +
2.20
21.92 + 5.48 +
2.60
50 46.50 +
3.50
37.20 + 9.30 +
3.50
-19.2
60 44.60 + 11.15 +
4.25
43.84 + 10.96 +
5.20
100 74.88 + 18.72 +
6.40
73.72 + 18.43 +
7.85
100 93 +
7
74.40 + 18.60 +
7
-10.8
200 151.24 + 37.81 +
10.95
149.2 + 35.3 +
13.50
200 190 +
10
152 + 38 +
10
-25.9
The column on the far right details the difference in rake as the buy-ins are compared, i.e. a $5
game at PartyPoker has 20.6% less rake than a $3 game at PokerStars and is equal in rake to the
$7 dollar game. Very good for low-stakes players.
As you can see that the overall rake is signifcantly lower at PartyPoker than it is at PokerStars
(aside from when compared to a higher blind level, i.e. $5 vs $7; $10 vs $15). The only adjustment
that needed to be made was in lowering the $20 rake from $1.80 to $1.60 to not only undercut
the games at PokersStars by reducing it from +3.8% to -7.7%, but to create a fowing dynamic
throughout the levels of rake at PartyPoker.
Whilst this move may be unproftable at frst, the $20 games is where medium-stakes poker
establishes itself, appealing to a wide number of regulars at PokerStars. If it possessed a higher
rake (or an unnoticeably lower rake) than that of the $15 and $30 PokerStars games, it would
deter them in every respect, so it is largely a strategic move.
Our plan will be to encourage players to engage at a higher buy-in on account of the lower
proportion of rake, as a step up from $15 to $20 is more achievable than $30. The $10 games
can then act as a safety net whilst boasting the same percentage of rake as the $15 games, a very
alluring offer indeed.
This would be facilitated by PartyPoker's range of lucrative bounty tournaments in which a
$20 buy-in is comprised of the $1 rake that PokerStars used to have.
However, being a full ring game, I must advocate the installation of additional blind levels
to enable a smoother transition between levels and delay the menacing crapshoot when the blinds
reach 200/100...
PokerStars PartyPoker
1500 chips 2000 chips
Timer Blind Levels Big Blinds Timer Blind Levels Big Blinds
0 - 10 10/20 75 0 - 8 20/40 50
9 - 16 30/60 33
11- 20 15/30 50
17 - 24 40/80 25
21 - 30 25/50 30
25 - 32 50/100 20
31 - 40 50/100 15
33 - 40 75/150 13
41 - 50 75/150 10 41 - 48 100/200 10
The addition of a second blind level (40/80) is not crucial to the 6-max games. But for the full
ring games (preferably 9-max), it is necessary to design a well-adjusted and satisfying game for
the players. Despite all as such, the number of big blinds generally remains less than that of
PokerStars, indicating quicker games and greater yield whilst achieving full customer satisfaction,
an essential tool in the battle for lifetime players.
However, you could also argue that because of the low rake a second blind level may not be
necessary, especially in a game which renders a higher level of table activity due to the knockout
prizes. Although these same players will be ready to participant in the standard full ring games
which would require more leverage.
Customer satisfaction is key if we wish to compete with the likes of PokerStars, since what we
are trying to attain is a highly infuential standing within the poker community so that we can
prosper in the acquisition and retention of customers.
The next stage is identical to the frst and will take effect at the same time, the sole difference
being the clock...
PokerStars versus PartyPoker
Turbo Full Ring Knockouts
$ Previous New $ Current New % ($)
1.50 1.08 + 0.27 +
0.15
1.06 + 0.26 +
0.18
2 1.80 +
0.20
1.44 + 0.36 +
0.20
-16.6
(0.15)
3 2.56 + 0.64 +
0.30
2.17 + 0.54 +
0.29
5 4.55 +
0.45
3.65 + 0.90 +
0.45
-6.9
(0.27)
7 5.24 + 1.31 +
0.45
5.16 + 1.29 +
0.55
10 9.10 +
0.90
7.30 + 1.80 +
0.90
+14.5%
(0.63)
15 11.28 + 2.82 +
0.90
11.11 + 2.78 +
1.11
20 18.20 +
1.80
14.60 + 3.60 +
1.60
+8.1%
(1.20)
30 22.52 + 5.63 +
1.85
22.22 + 5.56 +
2.22
50 46.50 +
3.50
37.20 + 9.30 +
3.50
-5.4%
(2.10)
60 45.12 + 11.28 +
3.60
44.45 + 11.11 +
4.44
100 75.32 + 18.83 +
5.85
74.24 + 18.56 +
7.20
100 93 +
7
74.40 + 18.60 +
7
-2.8%
(7)
Although the difference in rake is not nearly as alluring, it still has its place within the poker room
by working alongside the regular knockout. PartyPoker's position on turbo rake is something to be
considered, the rule of thumb being that the quicker a game is, the lower the rake should be.
This will require data analysis to determine whether having a lower rake will elicit more activity.
So its primarily a question of whether regular SNG players and newcomers will chose to engage
more frequently in turbos with lower rakes, or rather how much more, as they would have to be
substantially reduced in order to render any degree of publicity amongst outside players.
Nevertheless, due to the greater number of active turbo SNGs for the $10 and $20 buy-ins,
I cannot deem the lowering of rake to be at all proftable. PartyPoker still holds the advantage for
the higher stakes - $50 and $100 - which are of lesser popularity on the PartyPoker site, meaning
that they could attract a new market of players without having to adjust the rake. And because of
the overall popularity of turbo SNGs on the site, you will fnd this version of knockout in action
more often than the regular, perhaps more often than the standard turbo.
We must acknowledge that it adds another dimension to the SNG set-up. They will be popular in
their own regard and favourable during a time when other players are on the look-out for better
knockouts. Players are listening for any updates that work in their favour. This is one of them.
So consider it a partnership, a way to provide for two kinds of player - those who wish to join the
site in the interest of making proft at the regular knockout, and those who already play here and
wish to participate in the turbos for entertainment and for proft.
Part Three
I can immediately declare that these rake reductions will not be relevant to the cash games on
PartyPoker. To undercut PokerStars would suggest having to reduce the rake across the entire
cash game landscape, which would have immediate dire results and be far too risky. In addition
to this, the heads-up rake is so much worst now that there is no need to contend:
PokerStars Cash Games
Stakes ($) Previous HU New HU 3-4 Players 5+ Players
0.25/0.50 0.50 1 1.50 2.50
0.50/1 to 3/6 0.50 1 1.50 2.80
5/10 to 10/20 0.50 1 1.50 3
25/50 0.50 2 2 5
On the other hand, the rake increase for the heads-up hyper-turbo sit-and-go has been a hot topic
in the online realm. It was the move that challenged the Supernova Elite and their capacity to
maximise return, but are they loyal to their PokerStars? I think not. When a game with a razor-
thin edge no longer provides them with their hourly rate, these players will abandon their post in
search of the next most proftable game. Being as experienced and determined as they are, they
will be the ones to fnd it.
PartyPoker possesses the power to grant this to them, but not without change. The heads-up
turbo and hyper-turbo is a format that beckons a row of empty seats (the hyper-turbo especially).
I applaud the site on how it has replicated the PokerStars structure (as though an act of defance),
but without a suitable rake it is very much meaningless.
Simple observation will dictate that there is a gap in the market, and yes, it will not change
without the correct measures...
Heads-Up Hyper-Turbo Sit-and-Go's
PokerStars PartyPoker
$ Previous New $ Current New %
1.50 1.44 + 0.06 0.07 2 1.84 + 0.16 0.09 0
3.50 3.40 + 0.10 0.12 5 4.66 + 0.34 0.17
7 6.85 + 0.15 0.18 10 9.32 + 0.68 0.26
15 14.69 + 0.31 0.37 20 18.64 + 1.36 0.49
30 29.37 + 0.63 0.75 50 46.60 + 3.40 1.25
60 58.74 + 1.26 1.51 50 46.60 + 3.40 1.26
100 98.12 + 1.88 2.25 100 93.20 + 6.80 2.25
200 196.66 + 3.34 4 200 192 + 8 4
500 493.34 + 6.66 7.97 500 490 + 10 7.97
1000 988.83 + 11.17 13.42 1000 990 + 10 10 -25.5
These are the levels of rake in proportion to one another, demonstrating how much they would
need be reduced simply to compete with the likes of PokerStars. But alike the knockout SNGs
I will defend the premise that there is a little to be lost and much to be gained. So an argument
can be made on how the rake for the buy-ins could descend from 0% ($2) to -25.5% ($1000).
This opens a door for new players to discover the game and whatever minuscule amount is lost
from having a 45¢ rake instead of 49¢ will be redeemed greatly when these players rise through
the ranks with considerably more ease to eventually become a $200 hyper-turbo heads-up grinder
- now paying a rake of $3.60, 10% less than what it is at PokerStars (but still more than what it
used to be).
Alike the knockout SNGs, it would incorporate another feld of play within the sit-and-go
platform. Now that it is far more accessible to every variety of player, it would generate CLV
from newbies who become enticed by the structure of the game and its seemingly tiny rake.
As the hyper-turbo is so dissimilar to other forms of sit-and-go, cutting its rake in half would not
provoke outrage from other players. It would go largely unnoticed by those who do not partake
in online media, and for those who do - the more enthusiastic players – it would merely be
recognised it as a manoeuvre against PokerStars (or indeed a long-awaited cut).
It does require considerable reduction, but only in comparison to its previous levels which have
subsequently driven away potential customers. Being such a fast paced game any competent
player will recognise that it is overpriced. Besides, it is not the variety of game that typically
attracts recreational players who would fnd the lengthier and more dynamic games more
satisfying. This is designed for the Supernovas who make calculated decisions to engage in over
a 100 games a day and maximise their proft through rakeback.
This format of heads-up hyper-turbo is a template and can therefore be applied to 6-max
hyper-turbos which are also particularly popular amongst the high-stakes sit-and-go players,
thus generating a fresh feld of players - the grinders, the Supernovas, the Palladium Elite...
C H A P T E R V I
T H E R E T U R N O F T H E E L I T E
If the dream of becoming a high-stakes poker pro dies, business will eventually follow
- Phil Galfond
Part One
We must frst understand that these new sit-and-go tournaments will carry little weight unless we
implement the fnal part of our grand scheme. It may be time to revolutionise the reward system
and give rise to prosperity at a time of great controversy. Never will the fabrication of bonuses,
prizes and payments ever be so favourable.
The Supernova Elite are the most rational and perceptive of all beings, but like all beings they
bask the comfort of familiarity. They pay for the their services at PokerStars as it is the most well-
developed of all poker rooms, which is why we must make them an offer they cannot refuse.
As a well-known brand, PartyPoker has the advantage over rival poker rooms. Its software is of
the highest quality and its quarterly loyalty structure means that it will take them not nearly as
long to achieve an Elite status. We must frst examine and then compare...
PokerStars Stellar Rewards
$1 rake = 5.5 VPPs (VIP Player Points)
VIP Status VPP
Required
Rake ($)
Monthly Yearly
Stellar Reward ($) Rakeback (%)
Chrome 100 18.18 218.16 10 - 100 4.6 - 11
Silver 500 90.91 1,090.92 100 - 300 9.2* – 6.6
Gold 2500 454.55 5,454.55 350 - 900 6.4* – 6.2
Platinum 7500 1363.64 16,363.68 1,000 6.1
Supernova 100,000 18,181.81 1200 – 24,400 6.6 – 16.8
S. Elite 1,000,000 181,818.18 44,400 – 184,800
+ 5200**
27.3* - 26.1
*Landmark Stellar Reward (1,000 VPP for $50); (200,000 VPP for $20,000)
**WCOOP Main Event Ticket
PokerStars Cash Rewards and Tournament Tickets
1 VPP = 1-5 FPP (Frequent Player Points)
VIP FPPs Yearly FPPs
(minimum)
Cash
Value ($)
Rakeback (%) Tickets ($) Rakeback (%)
C 1 1200 12 5.5 Increase NA Vs Cash
S 1.5 9,000 100 9.2 67.3 142.17 109 13 +41.3
G 2 60,000 720 13.2 43.5 955.56 215 17.5 +32.6
P 2.5 225,000 2922 17.9 35.6 3585.33 215 21.9 +22.3
S 3.5 350,000 5,600 30.8 72.1 5621.21 530 30.9 +0.3
E 5 5,000,000 80,000 44 42.9 80303 530 44.2 +0.5
FPP Cash Rewards
VIP Status FPPs Cash ($) Value per 1000 FPPs ($)
Bronze 1,000 10 10 Increase (%)
Silver 2,250 25 11.11 +11.11
Gold 6,250 75 12 +10.8
Platinum 15,400 200 13 +10.83
Supernova 40,000 600 15 +11.54
100,000 1600 16 +10.67
This frstly provides us information on the range of their rakeback system, with the Bronze
and Chrome players receiving a minimum of 10.1% up to $9.09 of rake per month, and the
Supernova Elite receiving the maximum of 71.5% for conjuring up exactly $181,818.18 of rake,
equalling $129,600 of rakeback. So we can see just how heavily weighted it is towards the top.
But that is not all, for a pattern has taken shape towards the lower end of the reward scheme.
Where Chrome meets Silver the player is awarded with the most valuable of Stellar rewards
(27.5%), after that of the Elite (55%), the highest cash reward hike (11.11%) after that of
Supernova (11.54%) and most notably of all: the highest FPP increase (50%), above that of
the Elite (43%).
The Silver status also grants access to the tournament tickets which proves to be the highest value
increase when compared to the cash prizes (+41.3%). It is arguably the most valuable of statuses
and the mechanism for encouraging players not only to play to a certain degree, but to ascend
through the ranks, earn a title and ultimately become a member of the PokerStars team, thus
generating maximum customer lifetime value.
Part Two
With PokerStars new lower reward scheme to take effect in January, the PartyPoker system simply
needs to be equal to their current system, equal being the key term. To provide the Elite -
a current gap within the PartyPoker market – not only with the rakeback they desire, but to
demonstrate to these players that the site is going to provide them with the services they once had.
So when a player reaches the landmark $181,818.18 rake they will have earned a reward equal to
precisely $129,600. But how do we accomplish this without Stellar rewards or Edge payments as
seen on Full Tilt? This is where radicalism steps in: we introduce a payment system.
At frst this will seem unfavourable and perhaps too conventional, but there is no denying that it
holds the capacity for longterm fnancial beneft here at Bwin.Party, so long as we can formulate
a consistent and fair reward system that proliferates towards the top.
The prime objective will be to create an exciting and alluring reward scheme for potential
customers, one that is equal and therefore not inferior to competing poker rooms. We will
fabricate a lower band so that low-stakes players can develop an attachment to the poker room,
and a higher band that will suit the needs of the Supernova Elite, or rather the newly dubbed
Palladium Elite...
PartyPoker Cash Rewards and Tournament Tickets (Revolutionary Edition)
Status Rake ($) Rakeback Cash ($) Rakeback (%) $200 Ticket (PP) Rakeback (%)
Bronze 0 Bonus 4 8000 5
Chrome 50 3 10 6 5000 8
Silver 200 20 50 10 3000 13.3
Gold 500 70 200 14 2250 17.8
Palladium 4,500 1,386 1,500 30.8 625 32
P. Elite 45,000 19,800 20,000 44 450 44.4
Rakeback Comparison: Cash Rewards and Tournaments Tickets
PartyPoker Rake ($) R. Cash R. Ticket PokerStars Rake ($) R. Cash R. Ticket
Bronze 0 4 5 Bronze 0 5.5 NA
Chrome 50 6 8
Silver 91 9.2 13
Silver 200 10 13.3
Gold 455 13.2 17.5
Gold 500 14 17.8
Platinum 1365 17.9 21.9
Palladium 4,500 30.8 32 Supernova 18,182 30.8 30.9
P. Elite 45,000 44 44.4 S. Elite 181,818 44 44.2
One particular disadvantage of the current PartyPoker reward scheme, unlike that of PokerStars
or Full Tilt, is that players have the power to infate the value of their points at their own will.
By which I mean, they can accumulate points over a long period of time before dedicating a
single period to achieving a higher status before spending all of them in store. Meaning that
a Silver banded player who generates a monthly average of 600 points will be coerced into
increasing his stake and/or hours of play for a single month in order to reach Gold status
before spending all of his points.
It simply depends on how much of an issue this may become. With the substantial increase in
return for Palladium, a Gold player would certainly try to increase his quarterly points by half
if it meant he could double his cash bonus. Would a Gold player try to double them though?
Would this motivate him to move up a stake and continue to play there?
This would not be particular to the regulars either, as it is an opportunity that is presented to
everyone who visits the PartyPoker store and sees the number of points they could save with a
certain degree of effort. It can be calculated and put into practice at their own convenience.
So not only is it advisable to design a payment plan that rewards players for maintaining their
status, but to design one that facilitates Palladium players along their arduous path of becoming a
highly revered member of the Elite. However, this is diffcult to do without having to implement
our own Stellar or Edge rewards.
So to tackle this issue of 'rise buying' we could apply a monthly and a quarterly bonus.
A quarterly bonus is awarded to players who remain at a certain status for each month in
the quarter. If a player attains Gold, Gold, Silver, (Jan, Feb, Mar), then they would receive
a Silver quarterly bonus. But what if they only make Gold, Gold, Bronze? Then they would
receive a smaller 'encouragement' bonus.
It would certainly be received as generous and would contribute to PartyPoker's newfound image,
a central aspect of its revolution. We will simply call it a 'Bounty Award'.
Examples of Bounty Awards
Example A (Optimal) Example B (Simplifed)
Status Monthly Bonus
(%)
Quarterly Bonus (%)
Total
Monthly Cash
Bonus ($)
Quarterly Cash
Bonus ($)
Total
Chrome 2 2 4 2 6 12
Silver 3 3 6 8 24 48
Gold 4 4 8 30 90 180
Palladium 12 600
Palladium Elite 25 12,000
This outlines what place it holds within the PartyPoker reward system, acting as an incentive for
players to frequently engage in games out of enthusiasm and suspension, driving them to play
just to see how big a bonus they can make for themselves.
Part Three
PartyPoker has one other strength, one that can be used to secure medium- and high-stakes
players if there is indeed a perpetual shadow of skepticism looming over this novel reward system
and its dramatic rise in rakeback. One that could set PartyPoker aside from other poker rooms
and become the defning factor within our conversion rate optimisation...
This is of course: Missions. With PokerStars' 'Battle of the Planets' leader board now declared
null and void - much to every sit-and-go player's frustration - PartyPoker can introduce fresh
promotions with levels dedicated to the Palladium Elite where the prizes elevate by an
extraordinary amount to deliver the additional 25% so that they can secure the 70% rakeback
they now seek.
This can further be used as a tool for enticing the Palladium players to become a member of the
Elite. Their frst Mission, producing an average of however many points, could reward them with
a $900 bonus when complete. The second, a more challenging Mission, would award them more.
In order to not deter players by complicating the Mission, they can be as simple as playing '10,000
$100 hyper-turbo heads-up SNGs' or '200,000 $10/$20 cash game hands' or even 'accumulate
20,000 points' - which ever one they elect to pursue, thus 'proving' themselves as an Elite player.
Each quarter that Palladium Elite is not obtained the Missions are reset, making them familiar as
well as motivating. Once Elite status is obtained there is no more need to 'prove' themselves with
these particular Missions, but they can now partake in the promotional Missions that only a
Palladium Elite could possibly succeed in – 'Impossible'.
This may just be the ideal of the three reward systems as it differentiates PartyPoker from the
likes of PokerStars and Full Tilt, eradicating any accusations that PartyPoker is just 'copying'
PokerStars and Full Tilt.
It also creates the opportunity to develop a constant array of stimulating Missions that could turn
PartyPoker into an exciting poker room not only for the recreational and the professional players,
but for the employees also. It can be used to form a greater sense of connection and loyalty by
engaging both parties which, according to research, generates a revenue gain of 3.4 times that of
the norm.19
I would certainly vote on a system in which truly devoted players are awarded for
their hard work.
Rakeback Summary
Status Cash (%) Tickets (%) *Missions (%) Maximum Total
(%)
Bronze 4 5 1** 6
Chrome 6 8 5 13
Silver 10 13.3 5 18.3
Gold 14 17.8 5 22.8
Palladium 30.8 32 15 47
Palladium Elite 44 44.4 27 71.4
* Estimations relevant to what Mission level they can accomplish (ex. Easy, Tough, Challenging,
Extreme, Impossible), for instance a Palladium would have to yield an average of 72,000 points to
earn the full 15% return, whereas say, a 4% return would only require 12,000 points, thus
motivating them to generate more rake and eventually earn a higher status.
** The monthly Easy Mission will on average produce enough rake to reach Chrome status ($50).
Example
Mission
Monthly Quarterly
Generated Average
Points Rake ($)
Return ($)
Easy 200 100 5
Tough 1,600 800 40
Challenging 4,000 2,000 100
Extreme 72,000 36,000 5400
Impossible 120,000 60,000 16,200
Missions would ideally be divided into sections in which each section (or task) is presented with a
bonus, meaning that a Palladium player can yield a return that totals 4%, 9% and then 15% for
each section of the Mission that is completed, thus rewarding them for their persistent play.
These estimations and examples are drawn out in regards to the previously discussed reward
system. So to make the Missions more lucrative, we would lower the rewards on the rakeback
program to a feasible 1-1 ratio of Cash to Missions (so the tickets remain an appealing purchase)
and that way more is earned rather than directly awarded...
Rakeback Summary (Revised)
Status Cash (%) Tickets (%) Missions
Max. (%)
Maximum Total
(%)
PokerStars
Bronze 4 Increase 5 Increase 1 6 Increase 5.5
Chrome 5 25 7 40 5 12 100 10.1 - 16.5
Silver 9 80 11 57.1 9 20 66.7 22.2 – 19.6
Gold 13 44.4 15 36.4 13 28 40 24 – 28
Palladium 23 76.9 25 66.7 23 48 71.4 37.5 – 47.7
Elite 35 52.2 35 40 35 70 45.8 71.5 – 70.3
First and foremost I must emphasise that this is the maximum that each status can earn, so a
Palladium player is directly rewarded with 23-25% rakeback in the form of points, but the other
23% has to be earned through an 'Extreme' Mission in which 72,000 points would be generated.
This brings forth the idea that Missions could be the bulk of reward at PartyPoker so that
players' awards are parallel to their volume of play. For example a Gold status player who has
accomplished all of the monthly Challenging Missions alongside the quarterly Challenging
Mission will have generated an average of 8,000 points, therefore receiving a set of prizes
totalling $500 (12.5% rakeback). This way the rewards become very fexible and very compelling
so that PartyPoker becomes a site recognised for its Missions rather than its rakeback.
This model of high-return Missions also depends on how effectively the information will fow
through digital media to become global poker news. If this new reward scheme can be described
by players as “insanely good” then that might just do it. If the Supernova Elite knew that they
could win $15,750 by completing a set of committing yet doable tasks, then this information
would spread like wildfre.
As PokerStars is set to eliminate the $5,200 ticket in January and reduce their Elite reward
scheme by 4% (equating to 68.5%), this allows PartyPoker to reduce their own by 2%.20
Though
there will be future VIP reductions over the course of 2015 and 2016, we must acknowledge that
PartyPoker is still contending with the likes of 888, PKR, WilliamHill, PaddyPoker, Everest Poker
and every other poker site that is capable of offering a better reward scheme. Which is why the
Silver and Gold statuses, whilst not relevant to our main target audience, would ideally match
that of PokerStars, as they are the primary target for the sit-and-go knockouts.
However, if the expected loss rendered by this design - despite its work-reward ratio - is indeed
too high, then they can remain at a level similar to what they are now. Therefore placing total
focus on the Palladium and Elite players, which would be deemed as a more sensible but less
ambitious approach to this revolutionary reward system.
Amongst the bottom ranks we can see that the Chrome status is bestowed with the highest overall
rakeback increase (100%), yet the Silver status experiences the highest leap in cash bonuses (80%),
closely followed by Palladium (76.9%), who experiences the highest leap in ticket value (66.7%),
shortly followed by Silver (57.1%). This type of structure will of course encourage players to
achieve these commendable statuses and fnd confdence in their success to one day climb their
way up to an even higher rank, thus working in conjunction with the Missions so that players are
being persistently driven to earn more.
The main advantage of this system is that it works in favour of the passionate players. The
Palladium and Palladium Elite will strive to maximise their proft whist recreational players
will simply enjoy the Missions and the regulars will take more of a middle ground. It creates
opportunity so that those who yearn for maximum proft will achieve it, whilst those who are
more relaxed about it, do not.
Conclusion
The question now resides on how this fts into everything. We do not wish to drive away our
regular sit-and-go and cash game players with professionals. We want to reel in the Supernova
and Supernova Elite so that they compete with one another. We must protect our players -
recreational and regular alike - so that our tables stays 'fshy', our rake remains good and our
rewards are held in high regard.
But what loss is PartyPoker willing to tolerate from the present Palladium, Gold, Silver and
Bronze players in order to extend its reach to a wider and more proftable audience? Would this
not be countered by the players who choose to remain, or even return? This new system would
undoubtedly exceed all expectations and optimise customer retention. It would bestow our players
with a greater sense of gratifcation, strengthening their emotion commitment and heightening
their intention to recommend, most signifcantly within the US market.
It would require extensive data analysis in order to execute a risk assessment that determines what
short term loss will be made, how many more Silver, Gold, Palladium and Elite players are
needed to make this a proftable strategy, how this will relate to other poker rooms, and what
infuence it will have on the US market. This being the key factor.
So I will stress that these changes are purely to fll this hole in the market, as PartyPoker will
continue to cater to its recreational players and reap the US market as it once did through its
entertainment value, confdent that many of its previous players still hold fond memories of the
poker room and are eager to play there once again.
Of course 2006 was a time when PartyPoker dominated the online poker scene with extensive
marketing and an exceptionally effcient poker room. But with PokerStars set to enter the US
with its own variety of entertainment and large-scale promotion, PartyPoker must strive to
disable their monopoly by offering their professional players better terms of play.
PartyPoker needs to place customer value at the centre of its business strategy and acquire
customers at a time when customer acquisition has never been so crucial. It will empower
PartyPoker to expand further over the next two years as PokerStars gradually relieves its title as
the unrivalled poker room and the predominant brand on the live circuit.
It is through revolutionary change that PartyPoker can build a high-spirited, strong-willed and
long-lasting profle within the global poker community. So when PokerStars takes its aggressive
approach to the US market with focus laden upon the gamblers, PartyPoker can centre its
attention on the professionals whilst still providing for the amateur players with exciting games
and inviting rewards, bestowing the poker room with a vast and varied demographic of players
and exceeding all proft targets in the years to come.
The End
S U M M A R Y
Intro An overview of the recent changes made at PokerStars
Chapter IV
Part One The reaction of the poker community
Part Two How other poker rooms have responded
Part Three The marketing opportunity this scenario presents
Chapter V
Part One A short history of Bwin.Party
Part Two The implementation of full ring knockout sit-and-go's
Part Three A reduction in rake for the hyper-turbo sit-and-go's
Chapter VI
Part One A deconstruction of the PokerStars reward system
Part Two A reconstruction of the PartyPoker reward system
Part Three How Missions could be used as the central means of reward
Conclusion How such changes relate to PartyPoker and the US market
Revolutionary Reward System
Advantages
• Greater potential for US market
• Acquiring new customers
• Retaining present customers
• Opening market to Elite players
• Maximising CLV
• Strong global image
• Stable work-reward ratio system
Disadvantages
• Potential fnancial loss through a radically different system
R O A D M A P S
Market and Strategy
1st
January:
Early Announcements
14th
January:
Newly Developed Sit-and-go's
1st
February:
Revolutionary Reward System
Online announcements of new
reward system with Chrome
and Palladium Elite statuses
(pg. 15)
Reduction in rake for HU
Hyper-Turbo SNGs (pg. 11)
Implementation of new
reward system with Chrome
and Palladium Elite status
(pg. 15)
Generate publicity. 1) Attract medium and high
-stakes players.
2) Engage current players.
1) Attract high-stakes players.
2) Form a relationship with
new players.
3) Establish a positive public
imagine (esp. in US market).
Online announcements of
'Challenging' and 'Impossible'
Missions (pg. 17)
Introduction of additional SNG
blind levels (pg. 9)
Implementation of Missions
(pg. 17)
Generate publicity. 1) Creating a fowing dynamic.
2) Reduce gamble factor.
3) Satisfy all varieties of player.
1) Attract high-stakes players.
2) Entertain recreational
players (esp. in US market).
3) Retain proft orientated
players.
4) Establish a positive public
image (esp. in US market).
5) Institute a fuent work-
reward system.
Introduction of SNG
Knockouts (pg. 8, 10)
1) Attract PokerStars players
(all stakes).
2) Engage current players.
All other announcements will be made on the day of initiation regarding Newly Developed Sit-
and-go's and Revolutionary Reward System on the 14th
of January and 1st
of February. This will
avoid informational clutter and heighten the signifcance of the Missions and reward system
announcement.
Online announcements will be made across all major online poker forums, social media, news
and e-magazines including TwoPlusTwo, PocketFives, TiltBook, Facebook, Twitter, WPT Poker,
Bluff Europe, Poker Player, Card Player, PokerSpace and Poker News.
Visionary: Events
October November December January
10th
Announcements of
casino games, sports
betting, rake increase
and rakeback
reduction at
PokerStars.
10th
Eradication of 'Battle
of the Planets' SNG
leader board.
4th
Rise in rake across
SNGs and cash games
at PokerStars.
18th
iPoker initiates heads-
up hyper-turbo.
26th
Representatives
continue to resign from
PokerStars (Victoria
Coren-Mitchell).
21st
PokerStars implement
online casino games
and sports betting.
No further news. 1st
PokeStars enter US
market via New Jersey.
1st
PokerStar's eradicate
the $5,200 ticket.
1st
PartyPoker announce
new reward scheme
with Missions.
1st
PartyPoker implement
new skins for lobby and
tables.
14th
PartyPoker implement
newly developed SNGs.
February 2015 2016 2017
1st
PartyPoker implements
new reward scheme.
PartyPoker embark
upon their quest of
acquiring new
representatives, namely
those previously
sponsored by
PokerStars.
New Missions are
created each
month/quarter
(continuous).
PokerStars make
further announcements
and changes.
PartyPoker gains new
representatives and
expands on the live
poker scene.
PartyPoker heighten
funding for software
development to
increase the rate of
hands per hour.
PokerStars continue
to increase rake and
lower rakeback.
PartyPoker continues
to expand with new
games, new players,
new Missions, new
software and new
representatives.
PokerStars eventually
becomes a gambling
platform for
recreational players.
Visionary: Trends
October November December January
10th
Commotion is created
over what effect these
changes will have on
online poker.
4th
Players become
enraged and begin to
look for sites with
lower rake, high
rakeback and/or a
SNG leader board.
18th
Other poker sites
begin to compete with
PokerStars.
26th
PokerStars degrades its
image as an attentive,
commendable poker
room.
Players continue to
search for new games
and new sites to
play at.
Commotion dies
down and reaches a
low point during the
festive season.
1st
PokerStars begins to
compete with PartyPoker
in the US market.
1st
PartyPoker generates
publicity through the
announcement of a new
reward scheme.
1st
PartyPoker becomes
more enjoyable to play
with new skins.
14th
PartyPoker generate
publicity through the
announcement of newly
developed SNGs
February 2015 2016 2017
1st
PartyPoker begins to
attract medium- and
high-stakes players.
PartyPoker forms a
strong, positive public
image.
PokerStars continues
to lose players and
credibility through
new changes.
PartyPoker begins to
attract medium- and
high-stakes SNG
players.
PokerStars
relinquishes the title
of being the best
poker room.
PartyPoker continues
to build a strong
public profle.
PokerStars eventually
loses its reputation as a
respectable poker site.
PartyPoker earns the title
of being the most
rewarding poker site.
B E H A V I O U R A L S E G M E N T
Attitude Towards Poker
Newbie A player who is new to the site and new to the game.
Recreational An unproftable player who plays for entertainment.
Regular A player who is proftable but not as active or proftable as a professional.
Professional A player who is very active and very proftable
Behavioural Elements
In Order of Relevance
Proft Entertainment Awareness/Knowledge Ambition
Professional Recreational Professional Regular
Regular Newbie Regular Newbie
Newbie Regular Recreational Professional
Recreational Professional Newbie Recreational
Estimated Usage
In Order of Relevance
Newbie Recreational Regular Professional
Stakes Micro
Low
Micro
Low
Medium
High
Medium
Low
High
Loyal status Bronze
Chrome
Chrome
Silver
Gold
Palladium
Gold
Silver
Palladium
Palladium Elite
Palladium
Estimated Relevance of Changes Based on Usage
On a Scale of 1 - 10
Segments Missions Hyper-turbo
SNGs
Knockout
SNGs
Palladium
Elite
Chrome Total
Newbie 5 5 10 2 10 32
Recreational 8 5 10 2 7 32
Regular 9 5 8 8 2 32
Professional 10 10 2 10 0 32
Prime Factors:
Proft Entertainment Awareness Ambition
Example of 6-Max Hyper-Turbo Grinder (Tomas 'MASUR0N1KE' Kubaliak)
25th
November 2008 - 24th
November 2014 783 active days 130.5 active days/year
137,725 games total £9,958,825 staked ($979.14 + 20.86 $487.52 + 12.48)
£312,826 x 0.287 = £89,781 total net rake at 71.3% rakeback
£89,781 / 137725 = £0.65 net rake per game
£89,781 / 783 = £114.66 net rake per active day
£114.66 x 130.5 = £14,963 net rake per year
1 PokerStars Steve (30/10/14), 'Announcement: PokerStars Changes to Rake, Spin & Go Prizes,
and Battle of the Planets', http://forumserver.twoplustwo.com/28/internet-poker/announcement-
pokerstars-changes-rake-spin-go-prizes-battle-planets-1485512/
2 Jason Glatzer (16/10/14), '7.3 Million Spin & Go Tournaments Played at PokerStars Within 10
Days', http://www.pokernews.com/news/2014/10/7-3-million-spin-go-s-played-at-pokerstars-
within-10-days-19548.htm
3 PokerStars Steve (30/10/14), 'Announcement: PokerStars Changes to Rake, Spin & Go Prizes,
and Battle of the Planets', http://forumserver.twoplustwo.com/28/internet-poker/announcement-
pokerstars-changes-rake-spin-go-prizes-battle-planets-1485512/
4 A. Mitchell (7/11/14), 'PokerStars “Sit-Out” Protest Passes Largely Unnoticed”,
http://www.onlinepoker.net/poker-news/poker-room-news/pokerstars-sitout-protest-passes-
largely-unnoticed/25122
5 Alex Fitzgerald (4/11/14), 'Galfond, Amundsgard, Fitzgerald, Shorr, and Others Comment On
PokerStars Rake Increase', http://www.pokernews.com/news/2014/11/pros-comment-on-stars-
rake-increase-19706.htm
6 Tim Red (22/11/14) 'Dear Poker Stars, Regs are Getting Completely Crush in Zoom Games',
http://forumserver.twoplustwo.com/28/internet-poker/dear-poker-stars-regs-getting-completely-
crushed-zoom-games-1490907/
7 Alan Markoff (26/9/14), 'Joe Cada, Marcel Luske Latest Pro Axed by PokerStars',
http://pokerworks.com/poker-news/2014/09/24/team-pros-joe-cada-marcel-luske-alex-
kravchenko-out-as-pokerstars-team-pros.html
8 Victoria Coren-Michell (26/11/14), 'Goodbye Team Pro',
http://www.victoriacoren.com/main/blog/archive/goodbye_team_pro
9 Ivan Potochi (5/11/14), 'Players Raising Their Voice Against Spin & Go's on PokerStars',
http://www.pokertube.com/poker-news/poker-gossip-opinion/players-raising-their-voice-against-
spin-goes-on-pokerstars
10 Tomas Kubaliak (9/10/14), 'Poker is not gambling – a petition against Spin&Go tournaments',
http://tiltbook.com/masuronike/blog/poker-is-not-gambling---a-petition-against-spingo-
tournaments/
11 [HTTP not available but pictorial evidence of the e-newsletter is available on request.]
12 VIP Grinders (21/11/14), 'iPoker introducing 25bbs Hyper HU SNGs'
http://tiltbook.com/vipgrinders/blog/ipoker-introducing-25bbs-hyper-husngs/?
utm_source=newsletter&utm_medium=email&utm_campaign=2014_11_19
13 Alex Fitzgerald (4/11/14), 'Galfond, Amundsgard, Fitzgerald, Shorr, and Others Comment On
PokerStars Rake Increase', http://www.pokernews.com/news/2014/11/pros-comment-on-stars-
rake-increase-19706.htm
14 David Baazov (13/6/14), 'Amaya CEO on Acquisition of PokerStars: “It Will Transform the
Entire Gaming Industry”, http://www.pokernews.com/news/2014/06/amaya-daavid-baazov-on-
the-acquisition-of-rational-group-18515.htm
15 Jason Glatzer (26/11/14), 'The New Jersey Online Poker Briefing: Jon “itsmejon” Borenstien
wins $9,500 on partypoker', http://www.pokernews.com/news/2014/11/the-new-jersey-online-
poker-briefing-jon-itsmejon-borenstein-19931.htm
16 Ola Amundsgard (4/11/14), 'Galfond, Amundsgard, Fitzgerald, Shorr, and Others Comment On
PokerStars Rake Increase', http://www.pokernews.com/news/2014/11/pros-comment-on-stars-
rake-increase-19706.htm
17 Steve Ruddock (3/12/13), 'Can PartyPoker Return to Prominence in the US?',
http://www.onlinepokerreport.com/9408/is-party-poker-poised-for-us-comeback/
18 Steve Ruddock (3/12/13), 'Can PartyPoker Return to Prominence in the US?',
http://www.onlinepokerreport.com/9408/is-party-poker-poised-for-us-comeback/
19 John Flemming, Jim Asplund (19/11/07), 'Human Sigma: Managing the Employee-customer
Encounter'.
20 PokerStars Steve (14/10/14), 'PokerStars VIP Club Changes',
http://forumserver.twoplustwo.com/28/internet-poker/pokerstars-2015-vip-club-changes-
1481864/

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Analysis of the Amaya Online Poker Crisis and Opportunity for Competing Sites

  • 1.
  • 2. STARS WARS A Business Analysis Report on the Amaya Online Poker Crisis December 2014 C O N T E N T S Introduction 3 Chapter IV Part One The Flight Has Begun 4 Part Two A Game of Cards 5 Part Three Window of Opportunity 5 Chapter V Part One The Lost Empire 7 Part Two Knockout Contest 7 Part Three Time is Money 11 Chapter VI Part One Method in the Madness 13 Part Two Bounty Hunting 14 Part Three Mission Impossible 16 Conclusion 19 Summary 21 Roadmaps 22 Behavioural Segment 25 Bibliography 27 B Y L . V . S L I S Z
  • 3. Introduction On the 12th of June 2014, Amaya Gaming Group agreed to purchase PokerStars, Full Tilt and parent company Rational Group for $4.9 billion. The deal was completed on the 1st of August. On October 30th , CEO David Beezov announced that there will be an increase in rake at PokerStars, incorporating such games as heads-up sit-and-go's, medium- & high-stakes sit- and-go's, and medium & high stakes cash games. These were to take effect on November 3rd . In addition to this there will be a 'slight' reduction in the VIP rewards on the 1st of January.1 This broadcast stood alongside earlier announcements that revealed the initiation of an exchange rate fee of 2.5% and the implementation of sports betting and casino games, both of which have already taken effect. The frst was rendered on October 9th in the form of the Spin & Go, a notorious 3-man sit-and-go in which the 'spin' prior to the match would determine whether the players would be competing for 2x the buy-in or up to 1200x the buy-in. It sparked 7.3 million games within the frst 10 days. However, of the 7.3 million games, only 377 reached the jackpot (1/20,000), the winner from each of these games receiving 1000x the buy-in.2 This jackpot has since been increase to 3,000x, heightening its gambling element and reaching a maximum of $90,000 for a $30 game. There would also be an increase in rake for this format.
  • 4. C H A P T E R I V A N E W H O P E Part One As you might expect, these changes provoked great outrage, becoming the centre topic of the poker world in the days to follow. The PokerStars TwoPlusTwo thread saw a total of 554 posts within the frst day, all of which were displays of annoyance, disappointment, anger, disgust and skepticism.3 The reaction of every player - recreational, regular and professional alike – was of considerable frustration. Players became rebellious, threatening to leave the site and attempting to organise sit-outs, but to no avail.4 To some these changes would seem foolish, as poker is an exceedingly communal game in which players have the power to unite. Although Alex Fitzgerald – professional player, coach and columnist - claims otherwise, that players 'have never shown the ability to unionise'.5 Nevertheless, a number of threads targeting PokerStars have since materialised on TwoPlusTwo - 'Dear Poker Stars, Regs are Getting Completely Crushed in Zoom Games', 'Can PokerStars close an count of an innocent player and prevent him from achieving SNE?', 'Petition – PokerStars: Lower the price of PLO Zoom', 'Outrageous Changes at PokerStars “Quiz”' - each of which have embraced verbal assaults as well as signs of detachment in such replies as 'they don't care' and 'just move to another site'.6 Many have described these changes as shortsighted, greedy and neglectful, eroding the brand's image of being very respectful of their customers. Others have theorised that it is simply a method for hindering the regulars in order to turn PokerStars into a gambling platform. The company has also parted ways with many of their Team PokerStars Pros such as Netherlands' all-time money winner Marcel Luske and 2009 WSOP main event winner Joe Cada. Cada disclosed that he decided to leave the brand after the new occupiers refused to bestow him with the customary 100% rakeback. Again, this was described as shortsighted.7 To the shock of many players, even the likes of poker personality and two-time EPT winner Victoria Coren-Michell recently proclaimed her departure from Team PokerStars Pro in response to their introduction of an online casino. Despite having been a representative for 7 years, she stated how she “cannot professionally and publicly endorse it . . . Poker is the game I love, poker is what I signed up to promote.”8 Over the course of the month, players have speculated on internet forums and social networks that this may just be the impending doom of online poker, where proftable players become unproftable and low-stakes players struggle to become high-stakes players. Even the Spin & Go has been described as having 'disrupted the SNG ecosystem', not counting the 9% shift of players away from the cash games.9 Supernova Elite and TiltBook founder Tomas 'masuronike' Kubaliak swiftly launched a petition against the Spin & Go, composing two sample letters for participants: one that suggests having the multiplier lowered to 100x the buy-in in order to alleviate the gamble factor, and one that supports its complete eradication.10 From all the great controversy that has arisen over the past month, it appears that this has become defning moment in online poker history.
  • 5. Part Two Word has spread that many players have started to leave PokerStars. On November 19th , Supernova Tomas 'Scarmaker' Molcan wrote a TiltBook newsletter on how many players 'swore... and then swore again that they'll switch sites if the opportunity arise, and it seems like that is exactly what is beginning to happen.' Arguing that while player power is limited, history has shown that organised player movement can have results.11 iPoker, who produces software for 27 different companies including PaddyPoker, Ladbrokes, WilliamHill, Bet365 and Titan Poker, have become aware of the opportunity here by constructing a heads-up hyper-turbo with the same structure as that of PokerStars (released November 18th ).12 These are sites that are celebrated for generally having a higher percentage of recreational players (more commonly referred to as 'fsh'), and can now offer better loyal programs and lower rakes than that of PokerStars. Fitzgerald reinforces this by asserting that 'I, for one, will no longer play a regular schedule there. The smaller sites have always had weaker competition, and now they will have better rake rates.' This is supported by low-stakes professional Nathan Williams who revealed that even though he will not refrain from playing at PokerStars, 'I will continue to spread my play around other sites if I see better games, rake levels, and rakeback offered.'13 With the volume of information that is continually fowing through digital media, it will not be long before such developments attract a wave of medium- and high-stakes players. Namely for proftability, but also as a passive-aggressive attack on PokerStars which outlines the emotional signifcance of this current scenario and the profound infuence it could have on the decisions that poker sites make. This move by iPoker could become a momentous event as it demonstrates that other poker sites are now willing to contend with the likes of PokerStars. With the lack of competition having always been a major issue, it now serves as a central aspect for the survival of online poker. Part Three What needs to be fully understood is the business opportunity that this moment in time presents. These events have triggered an almost revolutionary phenomenon and provoked a dramatic increase in churn for PokerStars, creating a window of opportunity for competing poker sites. Most of all the likes of PartyPoker which boasts a widely known and long established prominence within the poker world, signifying vast potential for customer acquisition. No alteration, development or transformation within PartyPoker will be of greater value than right now. Perseverance is vital for keeping ahead of the curve as Bwin.Party will also be competing on a global level with PokerStar's newfound casino games and sports betting. At the turn of the year PokerStars will become a force within New Jersey. David Beezov affrms that Amaya's track record in the US and current position in New Jersey will facilitate a 'speedier entry' of the PokerStars brand into the US.'14 This is all part of Amaya's plans to infltrate the US market and turn the $4 billion poker market into a $25 billion online gaming monopoly. And so time is of the essence as PartyPoker is still the prevailing force, having recently made PokerNews.com with the declaration of New Jersey's biggest weekend winners Jon 'itsmejon' Borenstien and 'BossSTIk' in the $50,000 guaranteed.15
  • 6. The online poker world thrives on competition so it is not only benefcial but imperative that PartyPoker strives to challenge PokerStars. With the rise of rake and introduction of casino games, PokerStars is - in the words of online pro Ola Amundsgard - 'turning more and more into a place where only the house wins, which is really bad for the game', concluding with how he fears that Amaya 'is going to kill online poker. They sure have the power to do it.'16 This is a circumstance that Playtech - the parent company of iPoker - recognise. If Bwin.Party is sold to Amaya then it will create a monopoly of monster proportion which will irrefutably lead to the demise of proftable poker. But it is all very much in the early stages. The PokerStars community feel they have been betrayed by Amaya who are simply using poker as a platform for online gambling. Based on numbers alone, it is still a very competitive poker site - but that is all it is now: numbers - the new owners are showing no regard to the game itself and little concern to its players. January will be a very interesting month for poker indeed, matters will continue to escalate as PokerStars implements the second part of its higher rakes and lower rewards scheme. During this delicate time, the sooner we act, the greater our yield will be. It is time to launch a counterattack on the Death Stars before its too late...
  • 7. C H A P T E R V T H E E M P I R E S T R I K E S B A C K Part One Bwin.Party Digital Entertainment, it was recognised as the world's largest traded online gaming frm, but that was before the arrival of Amaya. It is best known for its sport betting brand Bwin, and its online poker room PartyPoker.com. PartyPoker was once the world's largest online poker brand. Launched in 2001, it was a pioneer of online poker, but that was before the arrival of the 'Unlawful Internet Gambling Enforcement Act of 2006'. It was because of this that the site was forced to pullout of the US market, instantly costing the site 3/4 of its player base and relinquishing its reign over the online industry.17 This made way for competing brands PokerStars and Full Tilt - who remained in the US market – to be become the dominating force. Despite all as such, PartyPoker now thrives as the 3rd largest poker room in the online realm.18 It is advertised by a host of professionals on the live circuit, it operates its highly revered Premier League Poker (now reaching the 7th series) and further holds a partnership with the World Poker Tour, endorsed by its host: Mike Sexton. It is indeed a very recognisable and respected brand in the world of poker. Part Two PokerStars now aims to serve the recreational player. Yet our target audience are not the amateurs, but rather the experienced regulars that PokerStars has forsaken, the passionate mathematicians who make longterm investments in the name of proft. This is where we will sow our seeds. In the same way that PokerStars has made a short term gain in sacrifce of longterm proft, PartyPoker must be willing to make a short term sacrifce in order to maximise customer lifetime value. Whatever loss is made in the lowering of rake will be outweighed by customer acquisition and the reputation that the PartyPoker label establishes for itself - the reputation it once had before the fall of its US empire. The frst step to take will certainly be the least risky. It will appeal to the widest dynamic of player - amateur and professional alike. This is the engineering of regular full ring knockout sit-and-gos. They will function the same as the original sit-and-gos, except 1/5 of the prize pool will be dedicated to the elimination of other players...
  • 8. PokerStars versus PartyPoker Regular Full Ring Knockouts $ Previous New $ Current New % 1.50 1.08 + 0.27 + 0.15 1.03 + 0.26 + 0.21 2 1.80 + 0.20 1.44 + 0.36 + 0.20 -28.6 -12 vs $3 3 2.56 + 0.64 + 0.30 2.13 + 0.53 + 0.34 5 4.55 + 0.45 3.65 + 0.90 + 0.45 -20.6 0 vs $7 7 5.50 + 1.30 + 0.50 5.10 + 1.27 + 0.63 10 9.10 + 0.90 7.30 + 1.80 + 0.90 -7.4 +3.8 vs $15 15 11.12 + 2.78 + 1.10 10.96 + 2.74 + 1.30 20 18.20 + 1.80 14.60 + 3.60 + 1.60 -7.7 -7.7 vs $30 30 22.24 + 5.56 + 2.20 21.92 + 5.48 + 2.60 50 46.50 + 3.50 37.20 + 9.30 + 3.50 -19.2 60 44.60 + 11.15 + 4.25 43.84 + 10.96 + 5.20 100 74.88 + 18.72 + 6.40 73.72 + 18.43 + 7.85 100 93 + 7 74.40 + 18.60 + 7 -10.8 200 151.24 + 37.81 + 10.95 149.2 + 35.3 + 13.50 200 190 + 10 152 + 38 + 10 -25.9 The column on the far right details the difference in rake as the buy-ins are compared, i.e. a $5 game at PartyPoker has 20.6% less rake than a $3 game at PokerStars and is equal in rake to the $7 dollar game. Very good for low-stakes players. As you can see that the overall rake is signifcantly lower at PartyPoker than it is at PokerStars (aside from when compared to a higher blind level, i.e. $5 vs $7; $10 vs $15). The only adjustment that needed to be made was in lowering the $20 rake from $1.80 to $1.60 to not only undercut the games at PokersStars by reducing it from +3.8% to -7.7%, but to create a fowing dynamic throughout the levels of rake at PartyPoker. Whilst this move may be unproftable at frst, the $20 games is where medium-stakes poker establishes itself, appealing to a wide number of regulars at PokerStars. If it possessed a higher rake (or an unnoticeably lower rake) than that of the $15 and $30 PokerStars games, it would deter them in every respect, so it is largely a strategic move. Our plan will be to encourage players to engage at a higher buy-in on account of the lower proportion of rake, as a step up from $15 to $20 is more achievable than $30. The $10 games can then act as a safety net whilst boasting the same percentage of rake as the $15 games, a very alluring offer indeed. This would be facilitated by PartyPoker's range of lucrative bounty tournaments in which a $20 buy-in is comprised of the $1 rake that PokerStars used to have. However, being a full ring game, I must advocate the installation of additional blind levels to enable a smoother transition between levels and delay the menacing crapshoot when the blinds reach 200/100...
  • 9. PokerStars PartyPoker 1500 chips 2000 chips Timer Blind Levels Big Blinds Timer Blind Levels Big Blinds 0 - 10 10/20 75 0 - 8 20/40 50 9 - 16 30/60 33 11- 20 15/30 50 17 - 24 40/80 25 21 - 30 25/50 30 25 - 32 50/100 20 31 - 40 50/100 15 33 - 40 75/150 13 41 - 50 75/150 10 41 - 48 100/200 10 The addition of a second blind level (40/80) is not crucial to the 6-max games. But for the full ring games (preferably 9-max), it is necessary to design a well-adjusted and satisfying game for the players. Despite all as such, the number of big blinds generally remains less than that of PokerStars, indicating quicker games and greater yield whilst achieving full customer satisfaction, an essential tool in the battle for lifetime players. However, you could also argue that because of the low rake a second blind level may not be necessary, especially in a game which renders a higher level of table activity due to the knockout prizes. Although these same players will be ready to participant in the standard full ring games which would require more leverage. Customer satisfaction is key if we wish to compete with the likes of PokerStars, since what we are trying to attain is a highly infuential standing within the poker community so that we can prosper in the acquisition and retention of customers. The next stage is identical to the frst and will take effect at the same time, the sole difference being the clock...
  • 10. PokerStars versus PartyPoker Turbo Full Ring Knockouts $ Previous New $ Current New % ($) 1.50 1.08 + 0.27 + 0.15 1.06 + 0.26 + 0.18 2 1.80 + 0.20 1.44 + 0.36 + 0.20 -16.6 (0.15) 3 2.56 + 0.64 + 0.30 2.17 + 0.54 + 0.29 5 4.55 + 0.45 3.65 + 0.90 + 0.45 -6.9 (0.27) 7 5.24 + 1.31 + 0.45 5.16 + 1.29 + 0.55 10 9.10 + 0.90 7.30 + 1.80 + 0.90 +14.5% (0.63) 15 11.28 + 2.82 + 0.90 11.11 + 2.78 + 1.11 20 18.20 + 1.80 14.60 + 3.60 + 1.60 +8.1% (1.20) 30 22.52 + 5.63 + 1.85 22.22 + 5.56 + 2.22 50 46.50 + 3.50 37.20 + 9.30 + 3.50 -5.4% (2.10) 60 45.12 + 11.28 + 3.60 44.45 + 11.11 + 4.44 100 75.32 + 18.83 + 5.85 74.24 + 18.56 + 7.20 100 93 + 7 74.40 + 18.60 + 7 -2.8% (7) Although the difference in rake is not nearly as alluring, it still has its place within the poker room by working alongside the regular knockout. PartyPoker's position on turbo rake is something to be considered, the rule of thumb being that the quicker a game is, the lower the rake should be. This will require data analysis to determine whether having a lower rake will elicit more activity. So its primarily a question of whether regular SNG players and newcomers will chose to engage more frequently in turbos with lower rakes, or rather how much more, as they would have to be substantially reduced in order to render any degree of publicity amongst outside players. Nevertheless, due to the greater number of active turbo SNGs for the $10 and $20 buy-ins, I cannot deem the lowering of rake to be at all proftable. PartyPoker still holds the advantage for the higher stakes - $50 and $100 - which are of lesser popularity on the PartyPoker site, meaning that they could attract a new market of players without having to adjust the rake. And because of the overall popularity of turbo SNGs on the site, you will fnd this version of knockout in action more often than the regular, perhaps more often than the standard turbo. We must acknowledge that it adds another dimension to the SNG set-up. They will be popular in their own regard and favourable during a time when other players are on the look-out for better knockouts. Players are listening for any updates that work in their favour. This is one of them. So consider it a partnership, a way to provide for two kinds of player - those who wish to join the site in the interest of making proft at the regular knockout, and those who already play here and wish to participate in the turbos for entertainment and for proft.
  • 11. Part Three I can immediately declare that these rake reductions will not be relevant to the cash games on PartyPoker. To undercut PokerStars would suggest having to reduce the rake across the entire cash game landscape, which would have immediate dire results and be far too risky. In addition to this, the heads-up rake is so much worst now that there is no need to contend: PokerStars Cash Games Stakes ($) Previous HU New HU 3-4 Players 5+ Players 0.25/0.50 0.50 1 1.50 2.50 0.50/1 to 3/6 0.50 1 1.50 2.80 5/10 to 10/20 0.50 1 1.50 3 25/50 0.50 2 2 5 On the other hand, the rake increase for the heads-up hyper-turbo sit-and-go has been a hot topic in the online realm. It was the move that challenged the Supernova Elite and their capacity to maximise return, but are they loyal to their PokerStars? I think not. When a game with a razor- thin edge no longer provides them with their hourly rate, these players will abandon their post in search of the next most proftable game. Being as experienced and determined as they are, they will be the ones to fnd it. PartyPoker possesses the power to grant this to them, but not without change. The heads-up turbo and hyper-turbo is a format that beckons a row of empty seats (the hyper-turbo especially). I applaud the site on how it has replicated the PokerStars structure (as though an act of defance), but without a suitable rake it is very much meaningless. Simple observation will dictate that there is a gap in the market, and yes, it will not change without the correct measures... Heads-Up Hyper-Turbo Sit-and-Go's PokerStars PartyPoker $ Previous New $ Current New % 1.50 1.44 + 0.06 0.07 2 1.84 + 0.16 0.09 0 3.50 3.40 + 0.10 0.12 5 4.66 + 0.34 0.17 7 6.85 + 0.15 0.18 10 9.32 + 0.68 0.26 15 14.69 + 0.31 0.37 20 18.64 + 1.36 0.49 30 29.37 + 0.63 0.75 50 46.60 + 3.40 1.25 60 58.74 + 1.26 1.51 50 46.60 + 3.40 1.26 100 98.12 + 1.88 2.25 100 93.20 + 6.80 2.25 200 196.66 + 3.34 4 200 192 + 8 4 500 493.34 + 6.66 7.97 500 490 + 10 7.97 1000 988.83 + 11.17 13.42 1000 990 + 10 10 -25.5
  • 12. These are the levels of rake in proportion to one another, demonstrating how much they would need be reduced simply to compete with the likes of PokerStars. But alike the knockout SNGs I will defend the premise that there is a little to be lost and much to be gained. So an argument can be made on how the rake for the buy-ins could descend from 0% ($2) to -25.5% ($1000). This opens a door for new players to discover the game and whatever minuscule amount is lost from having a 45¢ rake instead of 49¢ will be redeemed greatly when these players rise through the ranks with considerably more ease to eventually become a $200 hyper-turbo heads-up grinder - now paying a rake of $3.60, 10% less than what it is at PokerStars (but still more than what it used to be). Alike the knockout SNGs, it would incorporate another feld of play within the sit-and-go platform. Now that it is far more accessible to every variety of player, it would generate CLV from newbies who become enticed by the structure of the game and its seemingly tiny rake. As the hyper-turbo is so dissimilar to other forms of sit-and-go, cutting its rake in half would not provoke outrage from other players. It would go largely unnoticed by those who do not partake in online media, and for those who do - the more enthusiastic players – it would merely be recognised it as a manoeuvre against PokerStars (or indeed a long-awaited cut). It does require considerable reduction, but only in comparison to its previous levels which have subsequently driven away potential customers. Being such a fast paced game any competent player will recognise that it is overpriced. Besides, it is not the variety of game that typically attracts recreational players who would fnd the lengthier and more dynamic games more satisfying. This is designed for the Supernovas who make calculated decisions to engage in over a 100 games a day and maximise their proft through rakeback. This format of heads-up hyper-turbo is a template and can therefore be applied to 6-max hyper-turbos which are also particularly popular amongst the high-stakes sit-and-go players, thus generating a fresh feld of players - the grinders, the Supernovas, the Palladium Elite...
  • 13. C H A P T E R V I T H E R E T U R N O F T H E E L I T E If the dream of becoming a high-stakes poker pro dies, business will eventually follow - Phil Galfond Part One We must frst understand that these new sit-and-go tournaments will carry little weight unless we implement the fnal part of our grand scheme. It may be time to revolutionise the reward system and give rise to prosperity at a time of great controversy. Never will the fabrication of bonuses, prizes and payments ever be so favourable. The Supernova Elite are the most rational and perceptive of all beings, but like all beings they bask the comfort of familiarity. They pay for the their services at PokerStars as it is the most well- developed of all poker rooms, which is why we must make them an offer they cannot refuse. As a well-known brand, PartyPoker has the advantage over rival poker rooms. Its software is of the highest quality and its quarterly loyalty structure means that it will take them not nearly as long to achieve an Elite status. We must frst examine and then compare... PokerStars Stellar Rewards $1 rake = 5.5 VPPs (VIP Player Points) VIP Status VPP Required Rake ($) Monthly Yearly Stellar Reward ($) Rakeback (%) Chrome 100 18.18 218.16 10 - 100 4.6 - 11 Silver 500 90.91 1,090.92 100 - 300 9.2* – 6.6 Gold 2500 454.55 5,454.55 350 - 900 6.4* – 6.2 Platinum 7500 1363.64 16,363.68 1,000 6.1 Supernova 100,000 18,181.81 1200 – 24,400 6.6 – 16.8 S. Elite 1,000,000 181,818.18 44,400 – 184,800 + 5200** 27.3* - 26.1 *Landmark Stellar Reward (1,000 VPP for $50); (200,000 VPP for $20,000) **WCOOP Main Event Ticket
  • 14. PokerStars Cash Rewards and Tournament Tickets 1 VPP = 1-5 FPP (Frequent Player Points) VIP FPPs Yearly FPPs (minimum) Cash Value ($) Rakeback (%) Tickets ($) Rakeback (%) C 1 1200 12 5.5 Increase NA Vs Cash S 1.5 9,000 100 9.2 67.3 142.17 109 13 +41.3 G 2 60,000 720 13.2 43.5 955.56 215 17.5 +32.6 P 2.5 225,000 2922 17.9 35.6 3585.33 215 21.9 +22.3 S 3.5 350,000 5,600 30.8 72.1 5621.21 530 30.9 +0.3 E 5 5,000,000 80,000 44 42.9 80303 530 44.2 +0.5 FPP Cash Rewards VIP Status FPPs Cash ($) Value per 1000 FPPs ($) Bronze 1,000 10 10 Increase (%) Silver 2,250 25 11.11 +11.11 Gold 6,250 75 12 +10.8 Platinum 15,400 200 13 +10.83 Supernova 40,000 600 15 +11.54 100,000 1600 16 +10.67 This frstly provides us information on the range of their rakeback system, with the Bronze and Chrome players receiving a minimum of 10.1% up to $9.09 of rake per month, and the Supernova Elite receiving the maximum of 71.5% for conjuring up exactly $181,818.18 of rake, equalling $129,600 of rakeback. So we can see just how heavily weighted it is towards the top. But that is not all, for a pattern has taken shape towards the lower end of the reward scheme. Where Chrome meets Silver the player is awarded with the most valuable of Stellar rewards (27.5%), after that of the Elite (55%), the highest cash reward hike (11.11%) after that of Supernova (11.54%) and most notably of all: the highest FPP increase (50%), above that of the Elite (43%). The Silver status also grants access to the tournament tickets which proves to be the highest value increase when compared to the cash prizes (+41.3%). It is arguably the most valuable of statuses and the mechanism for encouraging players not only to play to a certain degree, but to ascend through the ranks, earn a title and ultimately become a member of the PokerStars team, thus generating maximum customer lifetime value. Part Two With PokerStars new lower reward scheme to take effect in January, the PartyPoker system simply needs to be equal to their current system, equal being the key term. To provide the Elite - a current gap within the PartyPoker market – not only with the rakeback they desire, but to demonstrate to these players that the site is going to provide them with the services they once had.
  • 15. So when a player reaches the landmark $181,818.18 rake they will have earned a reward equal to precisely $129,600. But how do we accomplish this without Stellar rewards or Edge payments as seen on Full Tilt? This is where radicalism steps in: we introduce a payment system. At frst this will seem unfavourable and perhaps too conventional, but there is no denying that it holds the capacity for longterm fnancial beneft here at Bwin.Party, so long as we can formulate a consistent and fair reward system that proliferates towards the top. The prime objective will be to create an exciting and alluring reward scheme for potential customers, one that is equal and therefore not inferior to competing poker rooms. We will fabricate a lower band so that low-stakes players can develop an attachment to the poker room, and a higher band that will suit the needs of the Supernova Elite, or rather the newly dubbed Palladium Elite... PartyPoker Cash Rewards and Tournament Tickets (Revolutionary Edition) Status Rake ($) Rakeback Cash ($) Rakeback (%) $200 Ticket (PP) Rakeback (%) Bronze 0 Bonus 4 8000 5 Chrome 50 3 10 6 5000 8 Silver 200 20 50 10 3000 13.3 Gold 500 70 200 14 2250 17.8 Palladium 4,500 1,386 1,500 30.8 625 32 P. Elite 45,000 19,800 20,000 44 450 44.4 Rakeback Comparison: Cash Rewards and Tournaments Tickets PartyPoker Rake ($) R. Cash R. Ticket PokerStars Rake ($) R. Cash R. Ticket Bronze 0 4 5 Bronze 0 5.5 NA Chrome 50 6 8 Silver 91 9.2 13 Silver 200 10 13.3 Gold 455 13.2 17.5 Gold 500 14 17.8 Platinum 1365 17.9 21.9 Palladium 4,500 30.8 32 Supernova 18,182 30.8 30.9 P. Elite 45,000 44 44.4 S. Elite 181,818 44 44.2 One particular disadvantage of the current PartyPoker reward scheme, unlike that of PokerStars or Full Tilt, is that players have the power to infate the value of their points at their own will. By which I mean, they can accumulate points over a long period of time before dedicating a single period to achieving a higher status before spending all of them in store. Meaning that a Silver banded player who generates a monthly average of 600 points will be coerced into increasing his stake and/or hours of play for a single month in order to reach Gold status before spending all of his points.
  • 16. It simply depends on how much of an issue this may become. With the substantial increase in return for Palladium, a Gold player would certainly try to increase his quarterly points by half if it meant he could double his cash bonus. Would a Gold player try to double them though? Would this motivate him to move up a stake and continue to play there? This would not be particular to the regulars either, as it is an opportunity that is presented to everyone who visits the PartyPoker store and sees the number of points they could save with a certain degree of effort. It can be calculated and put into practice at their own convenience. So not only is it advisable to design a payment plan that rewards players for maintaining their status, but to design one that facilitates Palladium players along their arduous path of becoming a highly revered member of the Elite. However, this is diffcult to do without having to implement our own Stellar or Edge rewards. So to tackle this issue of 'rise buying' we could apply a monthly and a quarterly bonus. A quarterly bonus is awarded to players who remain at a certain status for each month in the quarter. If a player attains Gold, Gold, Silver, (Jan, Feb, Mar), then they would receive a Silver quarterly bonus. But what if they only make Gold, Gold, Bronze? Then they would receive a smaller 'encouragement' bonus. It would certainly be received as generous and would contribute to PartyPoker's newfound image, a central aspect of its revolution. We will simply call it a 'Bounty Award'. Examples of Bounty Awards Example A (Optimal) Example B (Simplifed) Status Monthly Bonus (%) Quarterly Bonus (%) Total Monthly Cash Bonus ($) Quarterly Cash Bonus ($) Total Chrome 2 2 4 2 6 12 Silver 3 3 6 8 24 48 Gold 4 4 8 30 90 180 Palladium 12 600 Palladium Elite 25 12,000 This outlines what place it holds within the PartyPoker reward system, acting as an incentive for players to frequently engage in games out of enthusiasm and suspension, driving them to play just to see how big a bonus they can make for themselves. Part Three PartyPoker has one other strength, one that can be used to secure medium- and high-stakes players if there is indeed a perpetual shadow of skepticism looming over this novel reward system and its dramatic rise in rakeback. One that could set PartyPoker aside from other poker rooms and become the defning factor within our conversion rate optimisation...
  • 17. This is of course: Missions. With PokerStars' 'Battle of the Planets' leader board now declared null and void - much to every sit-and-go player's frustration - PartyPoker can introduce fresh promotions with levels dedicated to the Palladium Elite where the prizes elevate by an extraordinary amount to deliver the additional 25% so that they can secure the 70% rakeback they now seek. This can further be used as a tool for enticing the Palladium players to become a member of the Elite. Their frst Mission, producing an average of however many points, could reward them with a $900 bonus when complete. The second, a more challenging Mission, would award them more. In order to not deter players by complicating the Mission, they can be as simple as playing '10,000 $100 hyper-turbo heads-up SNGs' or '200,000 $10/$20 cash game hands' or even 'accumulate 20,000 points' - which ever one they elect to pursue, thus 'proving' themselves as an Elite player. Each quarter that Palladium Elite is not obtained the Missions are reset, making them familiar as well as motivating. Once Elite status is obtained there is no more need to 'prove' themselves with these particular Missions, but they can now partake in the promotional Missions that only a Palladium Elite could possibly succeed in – 'Impossible'. This may just be the ideal of the three reward systems as it differentiates PartyPoker from the likes of PokerStars and Full Tilt, eradicating any accusations that PartyPoker is just 'copying' PokerStars and Full Tilt. It also creates the opportunity to develop a constant array of stimulating Missions that could turn PartyPoker into an exciting poker room not only for the recreational and the professional players, but for the employees also. It can be used to form a greater sense of connection and loyalty by engaging both parties which, according to research, generates a revenue gain of 3.4 times that of the norm.19 I would certainly vote on a system in which truly devoted players are awarded for their hard work. Rakeback Summary Status Cash (%) Tickets (%) *Missions (%) Maximum Total (%) Bronze 4 5 1** 6 Chrome 6 8 5 13 Silver 10 13.3 5 18.3 Gold 14 17.8 5 22.8 Palladium 30.8 32 15 47 Palladium Elite 44 44.4 27 71.4 * Estimations relevant to what Mission level they can accomplish (ex. Easy, Tough, Challenging, Extreme, Impossible), for instance a Palladium would have to yield an average of 72,000 points to earn the full 15% return, whereas say, a 4% return would only require 12,000 points, thus motivating them to generate more rake and eventually earn a higher status. ** The monthly Easy Mission will on average produce enough rake to reach Chrome status ($50).
  • 18. Example Mission Monthly Quarterly Generated Average Points Rake ($) Return ($) Easy 200 100 5 Tough 1,600 800 40 Challenging 4,000 2,000 100 Extreme 72,000 36,000 5400 Impossible 120,000 60,000 16,200 Missions would ideally be divided into sections in which each section (or task) is presented with a bonus, meaning that a Palladium player can yield a return that totals 4%, 9% and then 15% for each section of the Mission that is completed, thus rewarding them for their persistent play. These estimations and examples are drawn out in regards to the previously discussed reward system. So to make the Missions more lucrative, we would lower the rewards on the rakeback program to a feasible 1-1 ratio of Cash to Missions (so the tickets remain an appealing purchase) and that way more is earned rather than directly awarded... Rakeback Summary (Revised) Status Cash (%) Tickets (%) Missions Max. (%) Maximum Total (%) PokerStars Bronze 4 Increase 5 Increase 1 6 Increase 5.5 Chrome 5 25 7 40 5 12 100 10.1 - 16.5 Silver 9 80 11 57.1 9 20 66.7 22.2 – 19.6 Gold 13 44.4 15 36.4 13 28 40 24 – 28 Palladium 23 76.9 25 66.7 23 48 71.4 37.5 – 47.7 Elite 35 52.2 35 40 35 70 45.8 71.5 – 70.3 First and foremost I must emphasise that this is the maximum that each status can earn, so a Palladium player is directly rewarded with 23-25% rakeback in the form of points, but the other 23% has to be earned through an 'Extreme' Mission in which 72,000 points would be generated. This brings forth the idea that Missions could be the bulk of reward at PartyPoker so that players' awards are parallel to their volume of play. For example a Gold status player who has accomplished all of the monthly Challenging Missions alongside the quarterly Challenging Mission will have generated an average of 8,000 points, therefore receiving a set of prizes totalling $500 (12.5% rakeback). This way the rewards become very fexible and very compelling so that PartyPoker becomes a site recognised for its Missions rather than its rakeback. This model of high-return Missions also depends on how effectively the information will fow through digital media to become global poker news. If this new reward scheme can be described by players as “insanely good” then that might just do it. If the Supernova Elite knew that they could win $15,750 by completing a set of committing yet doable tasks, then this information would spread like wildfre.
  • 19. As PokerStars is set to eliminate the $5,200 ticket in January and reduce their Elite reward scheme by 4% (equating to 68.5%), this allows PartyPoker to reduce their own by 2%.20 Though there will be future VIP reductions over the course of 2015 and 2016, we must acknowledge that PartyPoker is still contending with the likes of 888, PKR, WilliamHill, PaddyPoker, Everest Poker and every other poker site that is capable of offering a better reward scheme. Which is why the Silver and Gold statuses, whilst not relevant to our main target audience, would ideally match that of PokerStars, as they are the primary target for the sit-and-go knockouts. However, if the expected loss rendered by this design - despite its work-reward ratio - is indeed too high, then they can remain at a level similar to what they are now. Therefore placing total focus on the Palladium and Elite players, which would be deemed as a more sensible but less ambitious approach to this revolutionary reward system. Amongst the bottom ranks we can see that the Chrome status is bestowed with the highest overall rakeback increase (100%), yet the Silver status experiences the highest leap in cash bonuses (80%), closely followed by Palladium (76.9%), who experiences the highest leap in ticket value (66.7%), shortly followed by Silver (57.1%). This type of structure will of course encourage players to achieve these commendable statuses and fnd confdence in their success to one day climb their way up to an even higher rank, thus working in conjunction with the Missions so that players are being persistently driven to earn more. The main advantage of this system is that it works in favour of the passionate players. The Palladium and Palladium Elite will strive to maximise their proft whist recreational players will simply enjoy the Missions and the regulars will take more of a middle ground. It creates opportunity so that those who yearn for maximum proft will achieve it, whilst those who are more relaxed about it, do not. Conclusion The question now resides on how this fts into everything. We do not wish to drive away our regular sit-and-go and cash game players with professionals. We want to reel in the Supernova and Supernova Elite so that they compete with one another. We must protect our players - recreational and regular alike - so that our tables stays 'fshy', our rake remains good and our rewards are held in high regard. But what loss is PartyPoker willing to tolerate from the present Palladium, Gold, Silver and Bronze players in order to extend its reach to a wider and more proftable audience? Would this not be countered by the players who choose to remain, or even return? This new system would undoubtedly exceed all expectations and optimise customer retention. It would bestow our players with a greater sense of gratifcation, strengthening their emotion commitment and heightening their intention to recommend, most signifcantly within the US market. It would require extensive data analysis in order to execute a risk assessment that determines what short term loss will be made, how many more Silver, Gold, Palladium and Elite players are needed to make this a proftable strategy, how this will relate to other poker rooms, and what infuence it will have on the US market. This being the key factor. So I will stress that these changes are purely to fll this hole in the market, as PartyPoker will continue to cater to its recreational players and reap the US market as it once did through its entertainment value, confdent that many of its previous players still hold fond memories of the poker room and are eager to play there once again.
  • 20. Of course 2006 was a time when PartyPoker dominated the online poker scene with extensive marketing and an exceptionally effcient poker room. But with PokerStars set to enter the US with its own variety of entertainment and large-scale promotion, PartyPoker must strive to disable their monopoly by offering their professional players better terms of play. PartyPoker needs to place customer value at the centre of its business strategy and acquire customers at a time when customer acquisition has never been so crucial. It will empower PartyPoker to expand further over the next two years as PokerStars gradually relieves its title as the unrivalled poker room and the predominant brand on the live circuit. It is through revolutionary change that PartyPoker can build a high-spirited, strong-willed and long-lasting profle within the global poker community. So when PokerStars takes its aggressive approach to the US market with focus laden upon the gamblers, PartyPoker can centre its attention on the professionals whilst still providing for the amateur players with exciting games and inviting rewards, bestowing the poker room with a vast and varied demographic of players and exceeding all proft targets in the years to come. The End
  • 21. S U M M A R Y Intro An overview of the recent changes made at PokerStars Chapter IV Part One The reaction of the poker community Part Two How other poker rooms have responded Part Three The marketing opportunity this scenario presents Chapter V Part One A short history of Bwin.Party Part Two The implementation of full ring knockout sit-and-go's Part Three A reduction in rake for the hyper-turbo sit-and-go's Chapter VI Part One A deconstruction of the PokerStars reward system Part Two A reconstruction of the PartyPoker reward system Part Three How Missions could be used as the central means of reward Conclusion How such changes relate to PartyPoker and the US market Revolutionary Reward System Advantages • Greater potential for US market • Acquiring new customers • Retaining present customers • Opening market to Elite players • Maximising CLV • Strong global image • Stable work-reward ratio system Disadvantages • Potential fnancial loss through a radically different system
  • 22. R O A D M A P S Market and Strategy 1st January: Early Announcements 14th January: Newly Developed Sit-and-go's 1st February: Revolutionary Reward System Online announcements of new reward system with Chrome and Palladium Elite statuses (pg. 15) Reduction in rake for HU Hyper-Turbo SNGs (pg. 11) Implementation of new reward system with Chrome and Palladium Elite status (pg. 15) Generate publicity. 1) Attract medium and high -stakes players. 2) Engage current players. 1) Attract high-stakes players. 2) Form a relationship with new players. 3) Establish a positive public imagine (esp. in US market). Online announcements of 'Challenging' and 'Impossible' Missions (pg. 17) Introduction of additional SNG blind levels (pg. 9) Implementation of Missions (pg. 17) Generate publicity. 1) Creating a fowing dynamic. 2) Reduce gamble factor. 3) Satisfy all varieties of player. 1) Attract high-stakes players. 2) Entertain recreational players (esp. in US market). 3) Retain proft orientated players. 4) Establish a positive public image (esp. in US market). 5) Institute a fuent work- reward system. Introduction of SNG Knockouts (pg. 8, 10) 1) Attract PokerStars players (all stakes). 2) Engage current players. All other announcements will be made on the day of initiation regarding Newly Developed Sit- and-go's and Revolutionary Reward System on the 14th of January and 1st of February. This will avoid informational clutter and heighten the signifcance of the Missions and reward system announcement. Online announcements will be made across all major online poker forums, social media, news and e-magazines including TwoPlusTwo, PocketFives, TiltBook, Facebook, Twitter, WPT Poker, Bluff Europe, Poker Player, Card Player, PokerSpace and Poker News.
  • 23. Visionary: Events October November December January 10th Announcements of casino games, sports betting, rake increase and rakeback reduction at PokerStars. 10th Eradication of 'Battle of the Planets' SNG leader board. 4th Rise in rake across SNGs and cash games at PokerStars. 18th iPoker initiates heads- up hyper-turbo. 26th Representatives continue to resign from PokerStars (Victoria Coren-Mitchell). 21st PokerStars implement online casino games and sports betting. No further news. 1st PokeStars enter US market via New Jersey. 1st PokerStar's eradicate the $5,200 ticket. 1st PartyPoker announce new reward scheme with Missions. 1st PartyPoker implement new skins for lobby and tables. 14th PartyPoker implement newly developed SNGs. February 2015 2016 2017 1st PartyPoker implements new reward scheme. PartyPoker embark upon their quest of acquiring new representatives, namely those previously sponsored by PokerStars. New Missions are created each month/quarter (continuous). PokerStars make further announcements and changes. PartyPoker gains new representatives and expands on the live poker scene. PartyPoker heighten funding for software development to increase the rate of hands per hour. PokerStars continue to increase rake and lower rakeback. PartyPoker continues to expand with new games, new players, new Missions, new software and new representatives. PokerStars eventually becomes a gambling platform for recreational players.
  • 24. Visionary: Trends October November December January 10th Commotion is created over what effect these changes will have on online poker. 4th Players become enraged and begin to look for sites with lower rake, high rakeback and/or a SNG leader board. 18th Other poker sites begin to compete with PokerStars. 26th PokerStars degrades its image as an attentive, commendable poker room. Players continue to search for new games and new sites to play at. Commotion dies down and reaches a low point during the festive season. 1st PokerStars begins to compete with PartyPoker in the US market. 1st PartyPoker generates publicity through the announcement of a new reward scheme. 1st PartyPoker becomes more enjoyable to play with new skins. 14th PartyPoker generate publicity through the announcement of newly developed SNGs February 2015 2016 2017 1st PartyPoker begins to attract medium- and high-stakes players. PartyPoker forms a strong, positive public image. PokerStars continues to lose players and credibility through new changes. PartyPoker begins to attract medium- and high-stakes SNG players. PokerStars relinquishes the title of being the best poker room. PartyPoker continues to build a strong public profle. PokerStars eventually loses its reputation as a respectable poker site. PartyPoker earns the title of being the most rewarding poker site.
  • 25. B E H A V I O U R A L S E G M E N T Attitude Towards Poker Newbie A player who is new to the site and new to the game. Recreational An unproftable player who plays for entertainment. Regular A player who is proftable but not as active or proftable as a professional. Professional A player who is very active and very proftable Behavioural Elements In Order of Relevance Proft Entertainment Awareness/Knowledge Ambition Professional Recreational Professional Regular Regular Newbie Regular Newbie Newbie Regular Recreational Professional Recreational Professional Newbie Recreational Estimated Usage In Order of Relevance Newbie Recreational Regular Professional Stakes Micro Low Micro Low Medium High Medium Low High Loyal status Bronze Chrome Chrome Silver Gold Palladium Gold Silver Palladium Palladium Elite Palladium Estimated Relevance of Changes Based on Usage On a Scale of 1 - 10 Segments Missions Hyper-turbo SNGs Knockout SNGs Palladium Elite Chrome Total Newbie 5 5 10 2 10 32 Recreational 8 5 10 2 7 32 Regular 9 5 8 8 2 32 Professional 10 10 2 10 0 32 Prime Factors: Proft Entertainment Awareness Ambition
  • 26. Example of 6-Max Hyper-Turbo Grinder (Tomas 'MASUR0N1KE' Kubaliak) 25th November 2008 - 24th November 2014 783 active days 130.5 active days/year 137,725 games total £9,958,825 staked ($979.14 + 20.86 $487.52 + 12.48) £312,826 x 0.287 = £89,781 total net rake at 71.3% rakeback £89,781 / 137725 = £0.65 net rake per game £89,781 / 783 = £114.66 net rake per active day £114.66 x 130.5 = £14,963 net rake per year
  • 27. 1 PokerStars Steve (30/10/14), 'Announcement: PokerStars Changes to Rake, Spin & Go Prizes, and Battle of the Planets', http://forumserver.twoplustwo.com/28/internet-poker/announcement- pokerstars-changes-rake-spin-go-prizes-battle-planets-1485512/ 2 Jason Glatzer (16/10/14), '7.3 Million Spin & Go Tournaments Played at PokerStars Within 10 Days', http://www.pokernews.com/news/2014/10/7-3-million-spin-go-s-played-at-pokerstars- within-10-days-19548.htm 3 PokerStars Steve (30/10/14), 'Announcement: PokerStars Changes to Rake, Spin & Go Prizes, and Battle of the Planets', http://forumserver.twoplustwo.com/28/internet-poker/announcement- pokerstars-changes-rake-spin-go-prizes-battle-planets-1485512/ 4 A. Mitchell (7/11/14), 'PokerStars “Sit-Out” Protest Passes Largely Unnoticed”, http://www.onlinepoker.net/poker-news/poker-room-news/pokerstars-sitout-protest-passes- largely-unnoticed/25122 5 Alex Fitzgerald (4/11/14), 'Galfond, Amundsgard, Fitzgerald, Shorr, and Others Comment On PokerStars Rake Increase', http://www.pokernews.com/news/2014/11/pros-comment-on-stars- rake-increase-19706.htm 6 Tim Red (22/11/14) 'Dear Poker Stars, Regs are Getting Completely Crush in Zoom Games', http://forumserver.twoplustwo.com/28/internet-poker/dear-poker-stars-regs-getting-completely- crushed-zoom-games-1490907/ 7 Alan Markoff (26/9/14), 'Joe Cada, Marcel Luske Latest Pro Axed by PokerStars', http://pokerworks.com/poker-news/2014/09/24/team-pros-joe-cada-marcel-luske-alex- kravchenko-out-as-pokerstars-team-pros.html 8 Victoria Coren-Michell (26/11/14), 'Goodbye Team Pro', http://www.victoriacoren.com/main/blog/archive/goodbye_team_pro 9 Ivan Potochi (5/11/14), 'Players Raising Their Voice Against Spin & Go's on PokerStars', http://www.pokertube.com/poker-news/poker-gossip-opinion/players-raising-their-voice-against- spin-goes-on-pokerstars 10 Tomas Kubaliak (9/10/14), 'Poker is not gambling – a petition against Spin&Go tournaments', http://tiltbook.com/masuronike/blog/poker-is-not-gambling---a-petition-against-spingo- tournaments/ 11 [HTTP not available but pictorial evidence of the e-newsletter is available on request.] 12 VIP Grinders (21/11/14), 'iPoker introducing 25bbs Hyper HU SNGs' http://tiltbook.com/vipgrinders/blog/ipoker-introducing-25bbs-hyper-husngs/? utm_source=newsletter&utm_medium=email&utm_campaign=2014_11_19 13 Alex Fitzgerald (4/11/14), 'Galfond, Amundsgard, Fitzgerald, Shorr, and Others Comment On PokerStars Rake Increase', http://www.pokernews.com/news/2014/11/pros-comment-on-stars- rake-increase-19706.htm
  • 28. 14 David Baazov (13/6/14), 'Amaya CEO on Acquisition of PokerStars: “It Will Transform the Entire Gaming Industry”, http://www.pokernews.com/news/2014/06/amaya-daavid-baazov-on- the-acquisition-of-rational-group-18515.htm 15 Jason Glatzer (26/11/14), 'The New Jersey Online Poker Briefing: Jon “itsmejon” Borenstien wins $9,500 on partypoker', http://www.pokernews.com/news/2014/11/the-new-jersey-online- poker-briefing-jon-itsmejon-borenstein-19931.htm 16 Ola Amundsgard (4/11/14), 'Galfond, Amundsgard, Fitzgerald, Shorr, and Others Comment On PokerStars Rake Increase', http://www.pokernews.com/news/2014/11/pros-comment-on-stars- rake-increase-19706.htm 17 Steve Ruddock (3/12/13), 'Can PartyPoker Return to Prominence in the US?', http://www.onlinepokerreport.com/9408/is-party-poker-poised-for-us-comeback/ 18 Steve Ruddock (3/12/13), 'Can PartyPoker Return to Prominence in the US?', http://www.onlinepokerreport.com/9408/is-party-poker-poised-for-us-comeback/ 19 John Flemming, Jim Asplund (19/11/07), 'Human Sigma: Managing the Employee-customer Encounter'. 20 PokerStars Steve (14/10/14), 'PokerStars VIP Club Changes', http://forumserver.twoplustwo.com/28/internet-poker/pokerstars-2015-vip-club-changes- 1481864/